"urbe" is ablative. but duo shows it as the nominative in this lesson. it was impossible to report this mistake, so I'm writing it on this discussion. true word is "urbs," not "urbe." if the "in" preposition precedes the word, it takes the ablative form, so "in + urbs = in urbe." but again, the nominative case is "urbs."
You can't say urbe doesn't mean city. It absolutely means city, but carries extra information about its place in the sentence.
Teaching students the form used right now is a common teaching method and effective for not overwhelming students.
Edit you don't teach Latin by throwing cases at students before they know how cases work. Giving the dictionary entry with each new word would be a great way to scare students off
Latin is a declension language. It means that nouns, pronouns and adjectives take different forms depending on their grammatical function.
Those forms are called "cases". There are six of them in Latin (seven if you count the rarely used locative). Ablative is one of them and is used in many grammatical contexts (it is often referred to as a "catch-all" case). For a more comprehensive explanation, you can look here : https://en.wikipedia.org/wiki/Ablative_(Latin)
In the sentence at hand, the words adopting the ablative case are "in urbe". They are put in ablative because the preposition "in" + the noun in ablative indicates we are speaking of a place with no movement involved.